March 15, 2017

In a bid to boost the economy in Virginia’s coalfield
region, legislation to be signed by Gov. Terry McAuliffe seeks to spur the
development of pumped storage hydro electric power plants using water from
abandoned coal mines.

While the companion bills in both the Senate and House of
Delegates drew virtually unanimous support from both chambers, researchers,
coal reclamation experts and even some renewable energy advocates say the idea
is still unproven. While pumped storage facilities exist in Virginia and
elsewhere, no plant drawing water from abandoned coal mines has been built
anywhere in the world.

The effort led by Sen. Ben Chafin, Del. Terry Kilgore and
Del. Todd Pillion focused on seven counties in the western end of the state.
Like much of Appalachia, this region has seen dozens of coal mines close over
the past decade, draining local governments of tax revenues to fund schools and
other government services.

Pumped storage plants work by using cheap, excess
electricity at night to pump water uphill into a higher elevation lake or
reservoir. Energy can be recaptured during times of higher demand by reversing
the flow and sending the water through turbines to a lower reservoir.

Pumped storage plants are operating throughout the world and
have been assessed for abandoned
iron pits in Minnesota, where the presence of iron and the threat of rust
when water oxidizes threatens operations. In addition to the amount and the
quality of the water needed, the coalfield region needs to be geologically
stable, said Don Fosnacht, an associate professor at the University of
Minnesota’s Natural Resources Institute.

Hayes Framme, Gov. McAuliffe’s point person on many energy
issues as the state’s Deputy Secretary of the Department of Commerce and Trade,
said engineers from the state’s Division of Mines, Minerals and Energy (DMME)
have been kicking around the idea for several years. While pumped storage has
never been tried with water trapped in abandoned coal mines, Tarah Kesterson, a
spokeswoman for DMME, said her colleagues believe the iron levels to be below any
harmful threshold.

Linda Church Ciocci, executive director of the National
Hydropower Association, said a recently-licensed pumped storage project in
Southern California by Eagle Crest Energy intends to draw on water from an
abandoned mine east of Palm Springs and may bode well for similar approaches in
Virginia.

An ‘Intriguing’ Concept

Because pumped-storage can serve as a type of “battery,” it
can sometimes be paired with wind systems which often operate best at night
when wind speeds in suitable locations are highest. With the strong appetite
for renewable sources throughout the PJM power grid that includes Virginia, the
low-cost, daytime, electricity could find willing buyers there to offset peak
prices, especially on summer days when demand for electricity drives wholesale
prices skyward.

The largest such pumped-storage plant in the world happens
to be in Virginia in Bath County. There, Dominion Virginia Power has been
operating a 3,000 megawatt-capacity plant since the mid-1980s. It has drawn
rave reviews as the “world’s biggest battery” and visits by curious engineers
and government officials from around the world.

Sen. Chafin and Delegates Kilgore and Pillion visited the
Bath County plant in December. They drew up Senate Bill
1418 and paired it with House Bill
1760. The bills, now combined, await McAuliffe’s signature. Hamme
signaled McAuliffe will sign it this spring.

“We think the concept is an intriguing one … enough
(not) to stop initial development in its tracks,” Framme said.

Framme and Matt Ogburn, Sen. Chafin’s legislative aide, said
most of the attention thus far is on several 50–400 MW facilities which could
amount to more than 2,000 MW. There are pairs of reservoirs in Wise and
Dickenson counties that appear, at least initially, to be suitable, Ogburn
said.

Questions About Who Pays

Unlike any other type of power plant, existing language in
both bills declares “construction of these generation and storage facilities
… to be in the public interest” and free of many permitting and other
rules that utilities and other new plant applicants must submit to.

But therein exists a potential hurdle: how much such a
facility will cost ratepayers and the company’s shareholders? While Dominion
Virginia Power and Appalachian Power (APCo), as investor-owned utilities, would
effectively be offered this streamlined path to approval and full recovery from
ratepayers, neither would commit to pursuing such a facility without extensive
study.

Fosnacht estimated from two
studies he has led that a 100-MW pumped storage facility would likely
cost about $120 million.

John Shepelwich, a spokesman for APCo, said, “We’re talking
about two possible scenarios here in a combined (APCo–Dominion) study. One is
the traditional approach to pumped storage, the other will focus on water trapped
in abandoned coal mines.”

As the utility that serves the coalfield region, APCo
already has a large, traditional, pumped storage facility to the east of the
coalfield region near Roanoke, Virginia at Smith Mountain Lake.

Shepelwich said tapping water from coal mines “might be more
of a stretch. We have a bit of a learning curve. That said, there are other
parties who may look at that option in the future.”

“Since the Bath County and Smith Mountain Lake facilities
were constructed, there have been new applications of pumped storage developed
world wide,” said David Botkins, a spokesman for Dominion. “This legislation
allows use of these new approaches.”

Beyond such projects’ technical feasibility, among the
utilities’ other considerations are the additional transmission lines that
would be required to connect the power to their respective networks and to the
PJM grid.

Ogburn also notes the counties would benefit from additional
tax revenue.

Adam Wells, who works on economic diversification
initiatives for the Appalachian Voices advocacy group and lives in Norton in
the heart of the coalfield region, signaled what’s contemplated would garner
significant support if such a facility could be paired with a large wind or
solar energy system.

“There’s growing favorable sentiment among elected leaders
and county developers for solar. We can remain as an energy-producing region.
It’s just that the medium is going to change,” Wells said.

“We’re trying to tackle a whole lot of things all at once,”
Ogburn said. “How are we going to diversify the economy; how are we going to
create jobs; how are we going to create tax revenue?”